Instead, Most Rev Blase Cupich will stay at the modest living quarters at the Holy Name Cathedral.
A statement released by his archdiocese said: "Another consideration for Archbishop Cupich in making this decision was his expressed desire to reside in a place where he could be most effective in serving all the people in the Archdiocese of Chicago.
"When his schedule permits, the Archbishop intends to say daily Mass at the Cathedral.
"The location also provides easy access to his office at Archbishop Quigley Center, as well as everything Chicago has to offer in everyday life in the City."
The Catholic leader's decision follows the example of Pope Francis, who chose to live in more humble surroundings in the Vatican.
North State Parkway mansion in Chicago has previously hosted both Pope John Paul II and President Franklin Roosevelt.
Archbishop Cupich will work with a committee to find the best uses for the building that will best serve the mission of the archdiocese.